29.10.202003:06 Forex Analysis & Reviews: Hot forecast and trading signals for EUR/USD on October 29. COT report. Traders await US Q3 GDP and ECB meeting results

EUR/USD 1H

Exchange Rates 29.10.2020 analysis

The euro/dollar pair suddenly moved down on the hourly timeframe on Wednesday, October 28, easily crossing the Kijun-sen and Senkou Span B lines and also went below the descending channel. No macroeconomic report published for the day and not a single important event took place. Nevertheless, market participants found reasons for a new round of buy positions on the dollar. It was within the same horizontal channel of $1.17-1.19. Take note that the pair reached the lower line of this channel almost perfectly, thus, we can now expect an upward reversal and gradual growth to the upper channel line, that is, to the area of the 1.1900 level. The technical picture remained practically unchanged even after the pair lost 160 points. Globally, traders have the same flat at their disposal, but they still have to catch short-term trends on the hourly chart.

EUR/USD 15M

Exchange Rates 29.10.2020 analysis

Both linear regression channels turned to the downside on the 15-minute timeframe, which is eloquent evidence of the current trend on the hourly chart and indicates that there are no signs of completing the downward movement.

COT report.

Exchange Rates 29.10.2020 analysis

The EUR/USD pair fell by around 40 points during the last reporting week (October 13-19). But in general, no significant price changes have been observed for the pair in recent months. Therefore, data from any Commitment of Traders (COT) report can only be used for long-term forecasting. The new COT report showed even fewer changes in the mood of professional traders than the previous one. Non-commercial traders, who, we recall, are the most important group of traders in the foreign exchange market, opened 1,081 Buy-contracts (longs) and 673 Sell-contracts (shorts). Take note that the "non-commercial" group decreased its net position in the last two weeks, which may indicate the end of the upward trend. However, the data provided by the latest COT report does not tell us anything at all. There are no changes, since non-commercial traders have opened almost 300,000 euro contracts. Thus, opening or closing of 1,000-2.000 contracts does not indicate anything. The lines of net positions of the "non-commercial" and "commercial" groups (upper indicator, green and red lines) continue to barely narrow, while the pair itself continues to trade in a horizontal channel. Therefore, we stick to our opinion - the upward trend is completed or is about to be completed, and the high reached near the 1.2000 level may remain the peak of this trend.

No macroeconomic report from both the US and the EU on Wednesday, and not a single important event at all. The big picture is systematically approaching Election Day and now it is generally impossible to say what factors market participants would base their trades in. Although, perhaps, we do not need to look for factors, because they do not exist. As we have mentioned many times, the foreign exchange market is not only about speculators who aim to make money. They are also commercial companies, central banks, which have completely different goals. Thus, the current strengthening of the dollar (within the same horizontal channel of 1.17-1.19) may not mean anything fundamentally. By and large, the pair lost only 160 points in a week, and before that it had risen in price by the same amount. Thus, we would not panic and make hasty conclusions since the quotes lost 60 points. The European Central Bank will hold a meeting today. Traders do not expect the ECB to change any parameters of monetary policy, thus, most likely, the meeting will turn out to be of passing. In addition, there will be quite important macroeconomic publications in America, like GDP for the third quarter.

Hot forecast and trading signals for GBP/USD

We have two trading ideas for October 29:

1) The EUR/USD pair moved down. Therefore, buyers are advised to try to resume trading upward while aiming for the resistance area of 1.1887-1.1912 and the 1.1926 level, but not before the quotes settle above the descending channel. Take Profit in this case can be up to 70 points. The 1.1887-1.1912 and 1.1900-1.1920 areas are extremely strong and bulls will unlikely be able to overcome them in the current environment.

2) Bears were active yesterday and they managed to pull down the pair by a significant distance. Therefore, sellers are advised to reopen short positions with a target on the support area of 1.1692-1.1699, if an eloquent sell signal is generated, for example, if the price rebounds from the Senkou Span B line (1.1784). Take Profit in this case can be up to 70 points.

Explanations for illustrations:

Support and Resistance Levels are the levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.

Kijun-sen and Senkou Span B lines are lines of the Ichimoku indicator transferred to the hourly timeframe from the 4-hour one.

Support and resistance areas are areas from which the price has repeatedly rebounded off.

Yellow lines are trend lines, trend channels and any other technical patterns.

Indicator 1 on the COT charts is the size of the net position of each category of traders.

Indicator 2 on the COT charts is the size of the net position for the "non-commercial" group.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

Paolo Greco,
Analytical expert
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